Reference no: EM131831275

MANAGING STRATEGY - WHEN THE INTERNAL ENVIRONMENT COMES FROM THE TOP

If you are a manager in a large organization, you will seldom find yourself holding a position of authority high enough that will give you the freedom to pursue a major organization strategy without significant input from senior executives.  In certain cases, you might find yourself assigned to promoting or executing a "favorite" strategy of a senior leader.

This is an all-too-common occurrence in business today.  In many cases, senior leaders get to where they are in an organization by developing and adhering to their own personal formula for success.  Unfortunately, many will try to apply this "one size fits all" strategy to problems that are far more complex and elusive.  From their position, it might look okay at 50,000 feet.  When your team dives deep into the details, you discover the chasms and mountains that build risk into the plan.

As an example, I worked for a new CEO who had risen rapidly through the ranks of another multi-national organization.  He had been plucked out and promoted into his new role with high expectations that he would do the same in our organization.  His recipe for success had been to drive out labor cost in products by closing high-cost assembly plants in Europe and North America and moving production to China.  This became his "modus operandi" for dealing with any profitability issue.  I was recruited to support him in his new role as CEO and was asked to head up an effort to drive cost out of chemical manufacturing operations by moving them to China.  I was never asked, "what strategy will drive cost out of chemical manufacturing"?  The CEO had his "pet" plan and wanted it implemented.  What worked well for labor-intensive assembly operations, was completely unsuitable for the high volume, complex and technically challenging chemical business.  Labor costs represented 32% of the COGS (Cost of Goods Sold) in his former organization.  Labor costs in the chemical operations he wanted to move out of North America were under 2% of the COGS.  On the other hand, the transportation costs to ship from China back to the primary markets of Europe and North America represented 4-6% of the COGS.

I had the task of explaining this reality to the CEO.  It was a very difficult and challenging time for me.  He was adamantly opposed to any other course of action.  I did my research well, obtained supporting information from cross-functional experts throughout the organization, and made my presentation to the CEO and the Board of Directors at the same time.  I was not combative and offered this leadership team two other cost-saving alternatives so that they could make a decision, and not just be left with a dead end.  In the end, the CEO was congratulated for the professionalism of his organization and they opted for a different strategy (the one I wanted).  An added benefit from doing a thorough job on the research was that the CEO stopped questioning our team's decisions.

QUESTION:  What should you do when you discover that a strategy favored and pushed by a senior executive above you is obviously wrong for the company?  How do you handle the situation if this "ill conceived" strategy looks like it will diverge from known corporate goals or values?